Escalating tensions between Iran and Israel have reignited concerns about global energy and input flows through the Middle East, placing renewed geopolitical stress on one of the world’s most critical shipping routes – the Strait of Hormuz. Iran’s parliament voted June 22 in favor of closing the strait following U.S.- and Israeli-military airstrikes. Although tensions appear to have temporarily eased, the situation remains volatile. Disruptions to petroleum and fertilizer shipments could resume with little warning.
Some U.S. agricultural products do move through the region but the Strait’s broader importance to American agriculture stems from its role in setting global prices for fuel, fertilizer and freight. Even indirect impacts can pressure already-thin margins for farmers and ranchers. This Market Intel explores the role of the Strait of Hormuz in global trade, the relative importance of Middle East markets for U.S. agriculture, and how further escalation could increase input costs and market risk even further.
Strait acts as chokepoint
The Strait of Hormuz connects the Persian Gulf to the Arabian Sea and the broader Indian Ocean trade system. At just 21 miles wide, the strait carries an outsized share of global commerce. According to data compiled by the U.S. Energy Information Administration, about 14 million to 15 million barrels per day of petroleum – including crude oil, condensates or light liquid hydrocarbons, and refined products – passed through the strait in 2024. That accounted for more than 20 percent of global petroleum consumption, underscoring its centrality in international energy markets.